Model Answer
0 min readIntroduction
Development administration, traditionally focused on state-led economic planning and welfare programs, underwent a significant transformation in India with the initiation of economic reforms in 1991. These reforms, encompassing Liberalisation, Privatisation, and Globalisation (LPG), marked a paradigm shift from a closed, regulated economy to a more open, market-oriented one. Prior to 1991, the Indian state played a dominant role in economic activity, controlling key industries and directing resource allocation. The LPG policies aimed to reduce state intervention, promote private sector participation, and integrate India into the global economy, fundamentally altering the nature of development administration and its objectives.
The Pre-LPG Era: Development Administration's Traditional Role
Before 1991, development administration in India was largely characterized by a bureaucratic, top-down approach. The state was the primary driver of economic development, with a focus on import substitution, public sector enterprises (PSEs), and centrally planned programs. The administrative machinery was geared towards implementing Five-Year Plans and achieving targets set by the Planning Commission. This era saw a significant expansion of the administrative apparatus, but also issues of inefficiency, corruption, and a lack of accountability.
Liberalisation: Redefining the State's Role
Liberalisation involved dismantling licensing requirements, reducing trade barriers, and easing restrictions on foreign investment. This led to increased competition, greater efficiency, and a shift in the state’s role from regulator to facilitator. Administratively, this meant a move towards deregulation, simplification of procedures, and a greater emphasis on transparency. The establishment of bodies like the Competition Commission of India (CCI) in 2002 reflects this shift. However, it also presented challenges in terms of capacity building within the administration to effectively regulate a more complex and dynamic economy.
Privatisation: Transforming Public Sector Enterprises
Privatisation aimed to improve the efficiency and performance of PSEs through disinvestment, strategic sales, and the introduction of private sector management practices. This had a profound impact on development administration, as the government had to develop new mechanisms for managing the privatization process, including valuation, bidding, and post-privatisation monitoring. The Department of Investment and Public Asset Management (DIPAM) was created in 2016 to expedite the disinvestment process. Privatisation also necessitated a re-orientation of administrative skills, with a greater demand for expertise in financial management, contract negotiation, and regulatory oversight.
Globalisation: Integrating with the World Economy
Globalisation involved integrating India into the global economy through increased trade, foreign investment, and technological exchange. This required significant changes in development administration, including adapting to international standards, promoting export competitiveness, and managing the risks associated with global economic integration. The establishment of Special Economic Zones (SEZs) in 2005 was a key initiative to attract foreign investment and promote exports. Administratively, this meant strengthening institutions responsible for trade negotiation, investment promotion, and intellectual property rights protection.
Impact on Development Administration: A Comparative Overview
| Aspect | Pre-LPG | Post-LPG |
|---|---|---|
| State's Role | Dominant, Controller | Facilitator, Regulator |
| Administrative Focus | Central Planning, Target Setting | Market Orientation, Efficiency |
| Public Sector | Dominance of PSEs | Private Sector Participation |
| Accountability | Limited, Bureaucratic | Increased, Citizen-centric |
Challenges and Opportunities
The LPG policies presented both challenges and opportunities for development administration. Challenges included:
- Capacity Building: The administration needed to develop new skills and expertise to effectively manage a more complex and dynamic economy.
- Equity Concerns: The benefits of economic growth were not always equitably distributed, leading to increased social inequalities.
- Regulatory Gaps: The rapid pace of economic change often outpaced the development of appropriate regulatory frameworks.
- Corruption: Privatisation and deregulation created new opportunities for corruption.
However, LPG also created opportunities for:
- Improved Efficiency: Increased competition and private sector participation led to improved efficiency and productivity.
- Economic Growth: India experienced rapid economic growth, lifting millions out of poverty.
- Technological Advancement: Globalisation facilitated the transfer of technology and knowledge.
- Citizen Empowerment: Increased transparency and accountability empowered citizens to demand better public services.
Conclusion
In conclusion, Liberalisation, Privatisation, and Globalisation have fundamentally transformed the nature of development administration in India. The state’s role has shifted from a dominant controller to a facilitator and regulator, and the administrative machinery has had to adapt to a more complex and dynamic environment. While challenges remain in terms of capacity building, equity, and corruption, the LPG policies have undoubtedly contributed to India’s economic growth and development. Moving forward, strengthening institutional capacity, promoting inclusive growth, and ensuring good governance will be crucial for harnessing the full potential of these reforms.
Answer Length
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